THE OFFICE OF DISCLOSURE CAN IMPROVE
COMPLIANCE WITH THE FREEDOM OF INFORMATION ACT REQUIREMENTS

Issued on August 31, 2007

Highlights

Highlights of
Report Number:2007-10-133 to the
Internal Revenue Service Commissioner forthe Small
Business/Self-Employed Division.

IMPACT ON TAXPAYERS

The Freedom
of Information Act (FOIA), the Privacy Act, and Internal Revenue Code (I.R.C.)
Section (§) 6103govern the release of
Federal Government records to the public. The Internal Revenue Service (IRS) has made
significant improvement in the timeliness of responses to FOIA and Privacy Act
requests; however, in 4.6 percent of FOIA and Privacy Act requests, and in 14.5
percent of I.R.C. § 6103 cases sampled, the IRS improperly withheld information
from taxpayers.TIGTA estimates
taxpayers were improperly denied information for 344 requests made under the FOIA
and Privacy Act and for 815 requests made under I.R.C § 6103 during Fiscal
Year 2006.This
is a potential violation of taxpayer rights because tax account information was
available and was not provided to taxpayers.

WHY TIGTA DID THE AUDIT

TIGTA is
required to conduct periodic audits to determine if the IRS properly denied
taxpayers’ written requests for tax account information and to include the
results of these audits in one of its Semiannual Reports to Congress.This is our eighth review of denials of FOIA,
Privacy Act, and I.R.C. § 6103 requests.

The overall
objective of this review was to determine whether the IRS improperly withheld
information requested by taxpayers in writing, based on FOIA exemption (b)(3),
in conjunction with I.R.C.§ 6103, and/or FOIA exemption
(b)(7), or by replying the requested records were not available.

WHAT TIGTA FOUND

The IRS improperly withheld information from requestors in 4
(4.6 percent) of the 88 FOIA and Privacy Act cases
sampled. This
represents a small improvement from the results in our Fiscal Year2006 audit report (6.1
percent).Also, the IRS improperly
withheld information from requestors in 12 (14.5 percent) of the 83 I.R.C.
§ 6103 cases. This represents a
significant increase over the 2.3 percent error rate for
I.R.C. § 6103 cases we reported last year.As a result, TIGTA estimates the Disclosure
offices did not provide available tax records to 344 requests made under the FOIA
and Privacy Act and to 815 requests made through I.R.C. § 6103.The errors appear to have occurred mainly
because of inadequate research or simple oversight by the Disclosure office
caseworkers.

Since Fiscal Year
2000, the IRS has made significant improvement in responding timely to FOIA and
Privacy Act requests.Responses to only 2 (2.3 percent) of the 88
cases in our sample were untimely. In our opinion, the delays in these 2 cases
were not significant because the responses were untimely by just 1 day or 2
days.In the previous TIGTA audits, the
percentages of untimely responses ranged from 7.3 percent to 43.5 percent.The increase in responsiveness may, in part,
be due to a significant decrease in the numbers of FOIA and Privacy Act cases
received during Fiscal Year 2006 compared to Fiscal Year 2005.

WHAT TIGTA RECOMMENDED

TIGTA made no specific recommendations during this audit because
recommendations made in our previous audit reports are still valid for the
issues reported.However, IRS management
reviewed the report prior to issuance and agreed with the facts, findings, and
outcome measurespresented.